Research – Ines Black

WORKING PAPERS

Better Together? CEO-Firm Match and Performance

[NEW VERSION COMING SOON]

This paper analyzes the relationship between CEO quality and firm productivity in the private sector using CEO job transitions. Using a matched employer-employee data set, I attempt to disentangle the role of the CEO type (identity) from that of the firm in revenue productivity and evaluate the existence and relevance of match complementarities between CEO and firm types. I present a proxy measure of CEO quality that takes advantage of differential patterns of CEO mobility throughout their careers to circumvent endogenous CEO job mobility. I find that a one standard deviation increase in CEO quality results in 5% increase in firm production. Higher estimated quality CEOs are more likely to hold a higher education degree, have a larger experience as a manager, invest in innovation and less likely to work in a family firm. Moreover, results indicate that CEO-firm complementarities are significant in firm production. The issue of CEO impact is of significant practical importance to firms and policy-makers alike, as it can partly explain the rise in wage inequality.

Network hiring, firm performance, and growth (new version coming soon), with Sharique Hasan

Network hiring—i.e. the preference for hiring workers who are referred by existing employees or have shared affiliations with them—is a prevalent practice across many industries. Considerable research shows hiring within a firm’s network provides soft information about potential hires as well as informal mechanisms of control once they join a company. While research shows that in-network hires perform better, little is known about the firm-level performance implications and the associated trade-offs of this practice. In this article, we study the impact of network hiring by using data on the universe of firms in Portugal between 1994 to 2017. We find that network hiring appears to increase firm performance, but at the expense of growth. Furthermore, network hiring seems to provide firms with information on intrinsic motivation traits of the candidates, rather than information on skills. We conclude with a discussion on how this practice should affect the strategy of firms, particularly young ones.

Hunting for talent: Firm-driven labor market search in America (new!), with Sharique Hasan and Rem Koning

How has digitization affected how firms hire? We argue that the mass availability of information on workers has led to increased investments in firm-driven search for talent (or “outbound recruiting”). We investigate this question using two data sets, one new. First, we conduct a nationally representative survey of over 13,000 American workers. We find that nearly 18 percent of all employed workers in the US were hired into their present company by the outbound recruiting effort their employer, either directly or through labor market intermediaries such as a headhunter. The share of hiring driven by firm-driven search is greatest among higher-income workers, at 20.3 percent, and those with STEM and business degrees, at 20 percent. Moreover, considerable regional variation exists. For example, over a quarter of Silicon Valley workers are hired in this manner, whereas only 14.5% of those in Rochester are. Second, we complement our worker-level results by analyzing a large sample of job postings in the US economy over the past decade. We find that firms, especially those relying on high-skilled labor, are increasingly developing capabilities to better hunt for talent—hiring more recruiters with skill in online search. Given the growth of this practice, we discuss implications for research on firm strategy and labor markets.

WORK IN PROGRESS

Software adoption and firm growth, with Victor Bennett and Todd Hall

(abstract forthcoming)

The Role of Human Capital: Firm Resilience and the Business Cycle

There is a longstanding literature in economics that examines the role of business cycles in shaping the distribution of firm productivity and, consequently, the resilience of firms to idiosyncratic shocks. However, there are still open questions regarding the source of differential effects on firm resilience. In this paper, we propose that part of the differential firm response can be explained by the share of highly skilled human capital to which the firm has access. We address the question of whether firms with a younger and more educated workforce are more resilient in the wake of a recession; in other words, whether they revert the job destruction process faster. We use the Great Recession as its subsequent period to evaluate the resilience of Portuguese firms according to workforce age and educational composition. Using an instrumental variable analysis, we find that firms with a higher stock of this critical mass of human capital fare better: they survive in higher rates and they start creating jobs earlier.

Matching non-monetary rewards and Intrinsic Motivations: Experimental Evidence from the Lab

This paper focuses on identifying and disentangling the motivations for volunteering, and how they influence involvement of volunteers. I study the potential to directly incentivize volunteers to donate their time by awarding non-monetary rewards that respond their intrinsic motivations. I conducted a lab experiment entailing a real effort task which reverted to the subject or a nonprofit. Each subject ranked five different non-monetary rewards according to their preferences, one of which was randomly assigned to her. I find that the likelihood to volunteer is greater when the subject is assigned to the condition which he considers his most preferred (exact matching). Moreover, the average percentage donated is also greater under exact matching. Alongside, results suggest that incentives targeting identification with the cause motivations are the most effective in increasing productivity, whereas those concerning perceived tangible (monetary) rewards are less effective.